Starting Feb. 21, 2025, Michigan’s minimum wage will increase, after the Michigan Supreme Court turned back a challenge.

The court ruling of July 31 means businesses will have to pay higher minimum wages and paid sick leave, which will deal a blow to many small businesses and the economy, said Kathy Wagaman, the executive director of the South Haven Chamber of Commerce. The court ruled in response to a 2018 lawsuit brought by a coalition of groups that prompted legislators to enact new requirements.

“Higher costs to small businesses only means higher cost to the consumer,” Wagaman told CapCon. “It’s basic economics.”

The worst part of the change is mandating paid sick leave for seasonal and part-time workers, Wagaman said.

“There are many unknowns yet, and as most generally is the case, these laws require a lot of interpretation to get all the specific details,” Wagaman wrote.

South Haven, population 4,000, heavily relies on seasonal tourists who fish, kayak and visit the downtown area.

Residents of the Lake Michigan city have a median age of 61 years old and a median household income of $63,202, according to Census data.

The schedule for the minimum hourly wage and tip credit is as follows:

• Feb. 21, 2025: $10 hourly minimum wage plus the inflation adjustment. The tip credit will be 48% of the minimum wage

• Feb. 21, 2026: $10.65 hourly minimum wage plus inflation adjustment. The tip credit will be 60% of the minimum wage

• Feb. 21, 2027: $11.35 hourly minimum wage plus inflation adjustment. The tip credit will be 70% of the minimum wage

• Feb. 21, 2028: $12 hourly minimum wage plus inflation adjustment. The tip credit will be 80% of the minimum wage

• Feb. 21, 2029: The state treasurer shall calculate the inflation-adjusted minimum wage. The tip credit will no longer exist.

Two-thirds of restaurant operators said they would lay off employees if the tipped wage were eliminated, 94% of operators would raise prices, and one in five full-service restaurants would close permanently, according to a recent survey undertaken by the Michigan Restaurant and Lodging Association.

Rep. Kara Hope, D-Holt, welcomed the state’s top court mandating a higher minimum wage and earned paid sick leave for Michigan workers.

“The wage increase and paid leave laws will finally reflect the will of the people, and the court’s decision holds employers harmless as it only applies prospectively,” Hope said in a statement. “More money in workers’ pockets means more income to spend in the local economy; this benefits business, workers and the community as a whole.”

Gov. Gretchen Whitmer approved $250,000 for a private school after criticizing privatized education.

"The movement to privatize education in this state has been a catastrophic failure, causing Michigan students to fall behind the rest of the nation," Whitmer stated when vetoing bills in 2021 that would have created scholarship tax incentives.

The 2025 state budget includes $250,000 for the Brookview Montessori School in Benton Harbor. The earmarked funds will upgrade the school structure, according to a press release from Joey Andrews, D-St. Joseph.

Private school funding is unpopular with public school advocates who form a substantial part of Whitmer’s political base. The Michigan Department of Education recently rebuked lawmakers for reducing spending on mental health and safety in public schools by $300 million.

“While we are sympathetic with the challenge facing the private school, there are facilities challenges in public schools across the state,” Bob Wheaton, director of the Department of Education’s Office of Public and Governmental Affairs, told Michigan Capitol Confidential. “Public dollars for infrastructure should address the needs of public schools.”

There is also a possibility that the allocation violates the Blaine Amendment approved by Michigan voters in 1970, according to Patrick Wright, Vice President of Legal Affairs at Mackinac Center Legal Foundation.

The amendment to the Michigan Constitution prevents public dollars from being spent on private schools.

“The Blaine Amendment prohibits aid to private schools to limit parents’ choices about the best education for their children,” Wright said in a statement. “But this bad policy has no loophole for aid that is political pork.”

Tuition at Brookview Montessori School is $10,500 per academic year, according to Private School Review. The average cost for private school tuition in Michigan is $6,919 for elementary school and $12,532 for high school, the website says. Brookview educates children from infancy through eighth grade.

The 2025 state budget “invests in hometowns, strengthens our workforce, and addresses housing needs,” Andrews said in his press release, adding that the earmarks provide funding for critical infrastructure projects, workforce development programs, and affordable housing initiatives that will improve residents’ quality of life.

The governor’s office did not respond to a request for comment.

Attorney General Dana Nessel’s office declined to comment on the potential violation of the Blaine Amendment.